The 2.3 percent gross domestic product (GDP) growth the country posted in the second quarter of 2026 may not be as low as initially reported, according to Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr.

Speaking at a forum hosted by the Economic Journalists Association of the Philippines on Friday morning, Remolona said last week's GDP figures were based on calculations using the same quarter of the previous year, which assumed that 70 percent of funds for public infrastructure projects were lost to corruption.

“We were told that GDP growth in the second quarter of 2026 was 2.3 percent. [A little low, a little] disappointing, and somewhat surprising. But actually, it's not that bad, because that was based on what we thought GDP was in Q2 2025,” Remolona said.

“Now given that it was lower than we thought in Q2 2025, our growth in Q2 was not really 2.3 percent. It was more like 3.2 percent.”

The Philippine Statistics Authority reported last week that GDP contracted for the fourth consecutive quarter in terms of growth, with the latest contraction marking the weakest in five years outside the pandemic recession, as infrastructure spending remained subdued amid probes into the flood control scandal.

Remolona said that, after the President flagged the controversy in the second quarter of last year, the growth rates reported by the government reflected then-Finance Secretary Ralph Recto’s testimony before the Senate, in which he said up to 70 percent of flood control funds had been diverted into the pockets of various politicians.

“But GDP in Q2 2025, as reported, was not really GDP. A big part of it, as you know, was spending on flood control that did not go into flood control. And I think in the testimony of Secretary Ralph Recto in the Senate, he said that could have been 70 percent, as much as 70 percent was diverted,” he said.

“And so if you adjust for that, Q2 2025 was not 5.4 percent growth; it was really just 4.6 percent.”

The country’s current economic situation has been further complicated by the onset of the national energy emergency in March. The PSA reported that headline inflation, despite easing to 6.2 percent in July, remains nearly seven times higher than a year ago. With unemployment also trending upward, some economists have raised concerns about stagflation — a condition Remolona said the Philippines has yet to meet.

“Stagflation usually means negative growth. We’re still growing. But what’s also true is we’re below potential,” he said.

The BSP has raised interest rates twice since the onset of the Gulf conflict in March. Remolona has maintained his hawkish stance on further rate hikes, noting that the central bank might have some breathing room as headline inflation has eased for three consecutive months.

“[W]ith the growth numbers and with inflation numbers, I think we need a more convincing downward trend for inflation before we can relax,” he said.

“Of course, the weaker growth that we're seeing means we can be less aggressive in trying to tame inflation. But in the face of an unpredictable opponent, oil prices, for example, we need to keep our eye on the border.”